Can investment income like dividends or capital gains help me qualify for a mortgage?

How do interest and dividends count?

• Two years of signed tax returns, or 24 months of account statements.
• A current statement showing you still own the assets.
• If the income is steady or rising, a two-year average; if it's falling, the most recent year.

If you'll use some of those assets for your down payment or closing costs, the lender subtracts that amount first, since the money you spend won't keep earning.

How do capital gains count?

Fannie Mae says capital gains generally shouldn't be treated as stable income, but they can be used with two years of tax returns, including Schedule D, and proof you own assets you could sell to keep paying the mortgage. The lender averages two years if steady or rising, or uses the latest year if falling. Capital losses on Schedule D don't have to be subtracted, even if they recur.

How does FHA treat interest and dividends?

HUD's Handbook 4000.1 uses your last two years of tax returns and your latest account statement. The lender uses the lower of your two-year average or your most recent year's average. Money you'll use for your down payment and closing costs is subtracted first, since it won't keep earning after closing.

Is there another way to use my investments?

Yes. If you're retired or near it, a lender may be able to turn eligible assets into qualifying income. See qualifying with retirement assets and the retirement guide.